Facebook revenue up 41% in quarter on growth of ads and users

New York Times

Updated 4:26 pm, Wednesday, November 4, 2015

Facebook posted another quarter of robust revenue growth, fueled by its mobile advertising business and by an increase in daily users.

On Wednesday, the Menlo Park company reported revenue of $4.5 billion in the third quarter, up 41 percent from $3.2 billion a year ago. That surpassed the $4.37 billion projected by Wall Street analysts, according to Bloomberg data. Profit was up 11 percent, with net income at $896 million (31 cents per share) compared with $806 million (30 cents) a year ago.

Facebook, propelled by its expansive advertising machine and enormous user base, has consistently been a bright spot for technology earnings. The company said that mobile advertising accounted for 78 percent of its ad revenue, up from 66 percent a year ago.

The number of daily active users of the service also exceeded 1 billion for the first time, up 17 percent from a year earlier, with mobile users up 23 percent to 1.4 billion.

The results follow a mixed set of social media financial results. Last week, LinkedIn easily beat Wall Street expectations with its quarterly results. But Twitter, embattled by executive turnover and a reorganization of its engineering base, gave a weak earnings forecast and showed dismal user growth numbers.

Shares of Facebook jumped about 3 percent after the results. The company’s stock is up more than 36 percent from a year ago.

“We had a good quarter and got a lot done,” Facebook CEO Mark Zuckerberg said in a statement. “We’re focused on innovating and investing for the long term to serve our community and connect the entire world.”

Some close watchers of the company see more potential for Facebook’s shares to rise, particularly because the social network has yet to make money off some of its assets.

WhatsApp, the mobile messaging service that Facebook bought in 2014 for more than $19 billion, has a base of more than 900 million global users but does not bring in any revenue. Facebook has also bought Oculus VR, the virtual reality hardware startup, for roughly $2 billion, but it has not begun to sell the virtual reality goggles made by the unit.

Facebook is also in the midst of building an airborne drone, one capable of delivering Internet access to parts of the world that are not easily receiving it. The effort is currently a money-loser.

And then there is Instagram, the 400-million-user photo-sharing network that is in its earliest stages of introducing advertising on the service.

“With Instagram, you could see it adding maybe $2 billion to revenues when you get into 2017,” said Robert Peck, an Internet analyst at SunTrust Robinson Humphrey. Peck has long been bullish on Facebook’s services that are not yet making money, as well as the company’s bread-and-butter advertising units.

Beyond the properties it owns, Facebook is dabbling in partnerships with media companies that could one day prove lucrative.

In May, the company introduced a feature with a handful of publishers — including the New York Times — that allows users to read stories from directly inside the Facebook app without being directed to a Web browser. Facebook is also preparing a stand-alone news application with partner publishers called Notify, according to a person close to the company. The product will alert users to breaking news stories.